Unilever 1Q17 Earnings Call Notes

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Graeme Pitkethly – Chief Financial Officer

Prospects for global economy looking brighter

“I think it’s fair to say that the prospects for the global economy are looking a little brighter than they have done for a while. While last year’s GDP growth was the lowest since 2009, the forecast for this year are now looking a little better. Employment levels in the developed markets are improving and many of our key immerging market currencies like India, Brazil and Indonesia appear to be bottoming out.

Commodity inflation is returning

“Commodity inflation is returning and well there is adds to the cost pressures for us particularly in the first half of this year. It will of course be better and use for the economies of the producing countries themselves, many of which contain large Unilever businesses as you know.”

Changes everywhere

“We have faster changes in consumer trends at both our global and local level, or in our customer channels with the rapid rise with an online sales in convenience stores so progressively a little less reliance overtime on traditional big box retailing, or in media with a changing path to purchase now requiring multichannel digital mobile first approaches everywhere, or in the political environment with economic and political volatility.”

Brazil interest rate are 13% compared to inflation around 4%

“Okay, Alain. Let me tackle the Latin America question first. You’ve hit the nail on the head really, the Latin America was really a tale of two halves in the first quarter. We’ve seen just turning to Brazil which you’ve spoken quite a lot about in Q4 as well, but we saw a 10% volume decline in Brazil. Now the market was down between 5% and 6%. Now encouragingly that is an improvement from the negative 10% market volume decline that we saw in Q4. So there’s been a slowdown in the rate of decline in Brazil but the market is still declining between 5% and 6%. Added to that we’re in a situation where I think interest rates in Brazil around about 13%, inflation is around about 4%. What you see within the within our distributors and wholesalers and within the trade is a bit of a credit crunch if you like, you see a lot of tendency to put and take money out of inventory investment and put it on deposit where you make a 13% return against only 4% inflation, so it’s quite a good place to invest at the moment. ”

Overall message for Asia is we’re getting back

“overall message for Asia is that we’re getting back. I think we’re starting to see the start of normalization back to more historic levels of pricing growth hopefully in Asia going forward and a nice balance of mix and volumes.”